Initial public offerings have long stood as the tentpole attraction of investment banking, combining financial number-crunching and flamboyant showmanship. Banks send their biggest hitters to pitch for top-line roles, investors jostle for allocations, CEOs triumphantly ring the opening bell, and the media breathlessly cover first-day trading like a Hollywood red-carpet premiere.

Today IPOs still command attention. Jumbo listings in Poland, India and Japan have grabbed the headlines in just the last couple of weeks. But IPOs seem to have lost some of their lustre. They’ve transformed from marquee events to marginal affairs — from grand festivals to county fairs, with the nagging sense that the real party is elsewhere.

Soaring markets, sluggish IPOs

As stock indices hit all-time highs, you’d expect a corresponding surge in IPOs. Instead, we’re seeing a curious disconnect. In the US, activity is picking up, but it’s a far cry from the usual buzz. IPO volumes are not just trailing behind the stimulus-fuelled bonanza of 2020-21; they’re even lagging the more normalised period of 2017-19.

It’s as if flotation candidates are slowly overcoming their stage fright, hesitantly stepping into the spotlight. Even JPMorgan CEO Jamie Dimon finds it “odd” that rising stock markets haven’t been accompanied by a commensurate increase in IPO activity

What about the AI revolution and other technological breakthroughs? Aren’t they driving a surge of listings? Not exactly, or at least not yet. Investors have pivoted from blue-sky bets to cold, hard cash flow.

Only seven technology companies have gone public in the US this year (of which three are trading below the IPO price in a market up over 20 per cent). The biggest flotation of the year has involved a cold storage Reit, and the latest market darling was an IPO of a private equity-owned aircraft maintenance firm. For all the froth in the stock market, investors seem to prefer down-to-earth investments to moonshots.

A global drought

But if Wall Street is slowly stirring from its slumber, most international exchanges remain in deep hibernation. From London to Hong Kong, São Paulo to Singapore, IPO markets range from comatose to quiet. Even Australia, despite its much-lauded superannuation pension system, has barely mustered $400mn in IPOs this year, with the standout listing being a burrito restaurant chain started by two New Yorkers.

With these meagre volumes, many international IPO markets aren’t mere backwaters; they’re fast becoming parched riverbeds, cracked and barren where once capital flowed freely. After-market liquidity remains a persistent problem. A few venues such as India and the Gulf region show signs of life, but these flickers of hope aren’t enough to reignite a global IPO bonfire. 

Moreover, these emerging markets deals can be hit-and-miss. Hyundai’s $3.3bn IPO of its India unit drew scant interest from retail punters and opened sharply lower on its debut. In Saudi Arabia, Arabian Mills’s $270mn IPO was 132 times oversubscribed and yet didn’t start trading for a month after pricing — only to open down 10 per cent. Investors crowded into the $1.6bn Warsaw IPO of retailer Zabka, only for the shares to break issue price on the second day of trading. These may be good assets, but emerging market listings are still tough nuts to crack.

China’s unexpected stimulus package offers some hope after three dismal years for IPOs, but it highlights the extent to which its markets are subject to the whims of Beijing. The recent sharp price volatility shows that much larger injections of epinephrine will be needed in any case.

Diagnosing the IPO malaise

So what’s behind this IPO sluggishness? The reasons are multi-faceted, but fundamentally the problem boils down to a lack of compelling companies on the supply side, a dearth of actively managed funds on the demand side, and well-meaning policy interventions that inadvertently made things worse.

But first there’s the lingering impact of the ultra-loose fiscal and monetary policies of 2020-21. Unprecedented stimulus allowed companies to raise private money at nosebleed valuations and pushed many to accelerate plans to go public, either through traditional IPOs or de-SPACs. Now, with many of those pandemic-era stars trading below their initial prices, investors are nursing their wounds. At the same time, some companies hesitate to go public, fearing that valuation will fall short of the levels achieved in their last private fundraising round. A “down round IPO” could also call into question the marks of the entire portfolio of their private equity backers, jeopardising their ability to raise their next fund.

That effect will wear off, as investor memories fade and private owners itch for an exit. Private equity faces mounting pressure: distributions to paid-in capital (DPIs) ratios have fallen, and a large backlog of unsold assets has piled up. Although flotations account for less than 10 per cent of exits, buyout and venture capital firms still rely on them as a credible way to cash out — if only to create price tension for other exit strategies. Now they’re running out of options.

More structurally, the boom in private capital has reshaped the IPO landscape. Changes in US law in 1996 eased state-level securities regulation, opening the floodgates for private fundraising. Combined with historically low interest rates and persistent tax bias favouring debt financing, this has made private equity more appealing than public markets. 

With access to deep pools of private capital, many founders prefer to retain control of their companies rather than face the burdens and hassles of going public. Why contend with the pressures of quarterly earnings calls and activist shareholders when private equity offers fewer (or at least more manageable) constraints? As a result, companies can stay private much longer, reducing the urgency for an IPO. Additionally, large private companies like Stripe can raise money to provide liquidity to their employee shareholders without going public, further diminishing the incentive for an IPO.

Public market investors fret that the primacy of private capital risks turning the IPO market into the financial equivalent of Filene’s Basement, the legendary Boston retail outlet that sold excess merchandise from its upscale counterpart, Filene’s department store. The worry is that much of the good stuff has been scooped up in private deals, leaving public investors to rummage through what’s left — often companies struggling to secure private funding or whose shareholders are racing for an exit. This raises the spectre of adverse selection, with private owners trying to offload unwanted inventory on to the stock market. And when companies do go public, it’s often more about insiders cashing out than raising growth capital — hardly an exciting narrative for investors.

While the prospect of staying private beckons, the regulatory load for a public company puts off some candidates. Going public means wading through thickets of red tape and running up huge costs, thanks to regulations like the 2002 Sarbanes-Oxley Act and new climate-related rules. Annual reports are longer than Russian novels. This is manna for lawyers, auditors, and consultants, but a heavy tax for listed companies. 

It hasn’t all been in one direction: the US enacted the 2012 JOBS Act and other measures to lighten the load, and overseas jurisdictions have been trying to streamline the listing process. But overall, the high cost of going public gives owners another reason to stay private for longer.

Another challenge has been the decline of broker research. Reforms like Eliot Spitzer’s early 2000s crackdown on conflicts of interest — which were largely emulated by overseas regulators — prompted banks to slash analyst coverage, especially outside the large-cap space. Fewer analysts mean less coverage, less investor interest, and a self-reinforcing cycle of declining liquidity. The situation worsened with Europe’s MIFID II directive, which decimated the research ecosystem by “unbundling” payment for research from trade execution commissions. The EU and UK have largely rescinded these rules, but as FT Alphaville explained, the damage has been done.

Then there’s the rise of passive investing and concomitant decline of stockpickers. Index funds have made it cheap and easy for investors to access markets, but drained liquidity out of IPOs. With more money flowing into passive vehicles, there’s less cash for active managers to back new listings. In London, long-only fund managers — once a force to be reckoned with — now pack a flyweight punch. Just look at National Grid’s £7bn rights issue in May, where the two lead banks ditched the long-standing practice of sub-underwriting to institutional shareholders and pocketed all the fees themselves. 

And prudential regulations have exacerbated this issue, with Solvency II discouraging European insurers from holding equities, and pension accounting rules forcing pension funds in countries like the UK to pile into bonds. Without a deep pool of fundamental investors, selling an IPO can sometimes feel like opening a restaurant in a town where everyone’s signed up for meal kits.

Size matters

While the overall IPO market struggles, investor demand for larger deals remains robust. Consolidation among asset managers and tepid market liquidity mean that investors naturally gravitate towards bigger company IPOs. These larger flotations offer the scale and liquidity that major funds crave, creating a bifurcated market where whales can still make a splash while smaller fish have to swim furiously to create a ripple.

This preference for size also explains why overseas listings can struggle to garner interest. The 1990s and 2000s saw blockbuster IPOs of state-owned giants all over the world, but the halcyon days of big privatisations are mostly over. With telecoms, energy, and financial juggernauts in private hands, there’s little left to rouse sleepy stock markets. Singaporean brokers reminisce about the humongous Singtel IPO in 1993, when retail investors lined up in Raffles Place to apply. Now they bemoan that only “one minuscule IPO” has graced their exchange in 2024.

These privatised companies had proved so appealing not only due to their profitability (often from a legacy near-monopolistic market position), but also due to their size. In that sense last week’s successful $2.3bn IPO of Tokyo Metro is a throwback to a golden era.

The US is able to birth companies that eventually grow into behemoths, but too many overseas companies lack the scale to appeal to the full waterfront of investors. So relatively few make the cut. 

As Mario Draghi noted in his recent report on competitiveness, no EU company with a €100bn market cap has been created from scratch in the last 50 years, “while all six US companies with a valuation of €1tn have been created in this period.” Size does matter, now more than ever.

One arguable exception is China, a vast market able to support numerous big companies. This explains why in politically more supportive periods, its IPOs have appealed to investors around the world. Unfortunately, the recent crackdowns on such sectors as tech and education have reminded fund managers that government action can eviscerate, if not incinerate, equity value overnight.

Unintended policy consequences

Ironically, many of the Western government policies contributing to the IPO slowdown were enacted with good intentions. The 1996 American legislation was designed to enable capital to flow across state lines. Stricter disclosure rules were implemented to increase transparency. Analyst independence was meant to protect investors. Rules on insurance and pension funds aimed to safeguard the assets of policyholders and beneficiaries. The rise of passive investing has made the stock market more accessible for the average person. Yet collectively, these developments have created an environment that’s increasingly inhospitable to new listings.

Or maybe that was the point all along. Policymakers perhaps feel more comfortable shifting fundraising to the private sphere, where sophisticated parties can fend for themselves and there’s less chance of political fallout or finger-pointing when things go wrong. It may sound perverse to impede public access to the best companies, but that is the consequence of policy choices.

A glimmer of hope?

Will the market for new flotations bounce back? Almost certainly yes, with markets at all-time highs and after two years of slow activity. There also remains a lot of interest in certain areas, such as biosciences and AI-related spaces, including power and infrastructure. Private markets are flush with cash, but public money may be cheaper to raise in some sectors.

And there will be good deals on offer for investors, perhaps because the hype has dissipated. It’s encouraging that on its third attempt to list in Frankfurt, academic publisher Springer Nature has so far traded solidly in the after-market. Tokyo Metro, an old-economy name, soared 45 per cent on its debut last week.

But it’s unlikely that IPOs will overall recapture their former glory. For those of us who grew up [sic] in the equity capital markets, it’s a deflating spectacle. Long gone are the days of deal closing parties that were so epic you couldn’t remember them the next day. Lucite deal toys, which used to be distributed to everyone involved in an IPO, are now carefully rationed like wartime food vouchers.

The IPO, once the life of the party, now finds itself nursing a drink in the corner, wondering where all the revellers have gone.

October marked the auspicious period of Navratri, but the festive cheer seems to have eluded the equity market. Foreign portfolio investors sold more than Rs 72,000 crore in the equity market so far this month, the highest ever for a month in over four years. In fact, the sell-off this time around was even more than the Rs 62,000 crore worth of shares they sold back in March 2020, when the world was grappling with the COVID-19 pandemic, and India had imposed a complete lockdown.

On the back of the relentless selling by foreign institutional investors, the benchmark BSE Sensex slipped around 5 per cent, and the BSE Smallcap index fell over 6 per cent this month till October 22. The FII selling has been partly offset by continued inflows into domestic mutual funds. SIP (systematic investment plans) inflows per month have now topped Rs 24,000 crore, which, in a way, has cushioned the fall in the market.

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What is driving the FII selloff?

A major reason that triggered the FII selloff was the recent stimulus measures announced by China. The measures, which included interest rate cuts by the Chinese central bank, saw a lot of foreign fund flows moving there as the valuations looked attractive. On the other hand, valuations in many pockets of India’s stock market have been expensive. That, coupled with comparatively slower earnings growth in India and signs of looming economic slowdown in the coming months, dampened the mood Motilal Oswal Financial Services recently forecasted earnings of Nifty 50 companies to grow 5 per cent year-on-year in the July-September quarter, the lowest in 17 quarters.

Escalating geopolitical tensions in West Asia and the looming Presidential elections in the United States, too, added to the uncertainties. However, despite the near-term worries, foreign investors still remain constructive on India in the long-term, opined Kaustubh Belapurkar, director and manager, Research at Morningstar Investment Research India.

“China’s been beaten down for long, so there’s always a valuation play at the heart of managers. So there would be some reallocation that potentially can happen, has happened, back into the Chinese market, but I think India still remains very positive for managers from the long run,” Belapurkar said.

While FPIs might have reduced some allocation to India, long-term funds are still looking to enter India, he noted.

The US Federal Reserve recently announced a sharp 50 basis points interest rate cut, and another 50 bps rate cut is expected by the end of December, with more cuts to follow in 2025 as the American central bank’s focus shifts to protecting growth while inflation has cooled.

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Typically, when interest rates come down in markets like the US, demand for risk assets goes up. Generally, in such scenarios in the past, flows to emerging markets—including India—have picked up, although that may not happen overnight, he said.

“Obviously there’s that whole risk of the US election. Once things around that stabilize, you might see that risk trade playing off again in markets like India. Especially when you see interest rates coming down, risk assets will become more and more attractive from a US investor’s perspective. And you might see, potentially, a reasonable amount of capital coming back from FIIs back into the Indian markets,” stated Belapurkar.

While valuations have been a concern for some time if the local flows continue to remain strong, valuations may continue to remain elevated, he added.

“You pay a little bit of an excess for growth at times,” pointed Belapurkar.

‘Investors chasing funds’

As domestic fund flows have surged over the last few years, new fund launches have also picked up in a big way, with sectoral and thematic funds also gaining traction. Investors chasing such funds worry Belapurkar, and he feels investors, especially those who have only recently started their investment journey, should not get swayed by recent past returns.

“If you invest into a sector, thinking that it’s delivered 50 per cent over the last one year, it’s actually the worst time to get involved. Sector rotation happens. We saw that with technology just post-COVID where it was the best-performing sector, and then it lagged significantly. Most of the money came into tech funds after the run-up happened. And history is kind of repeating itself. So I think that’s something investors need to keep in mind. Don’t chase recent performance especially when it comes to sector themes. Because you can get it horribly wrong,” he stressed.

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How does he see domestic markets panning out over the next 6-12 months?

Belapurkar feels there could still be minor corrections, especially if FIIs continue to sell massively. He doesn’t expect any sharp drop unless, of course, geopolitical tensions escalate and a full-fledged war breaks out, and then there will be further flight of global capital. But, such events are unpredictable.

Investors, though, need to lower their returns expectations and can’t bet on extraordinary returns continuing.

“You have had this crazy bull run, when you put money in any fund, you made 20-30-40 per cent, whatever. Don’t expect that this is going to continue to perpetuate. Returns will normalise. If you look at longer-term returns for any market cycle, 12-15 per cent in equities is what it will come down to,” said Belapurkar.

The total value of ‘lost’ pension pots is now estimated to be £31.1bn, new data published by the Pensions Policy Institute (PPI) reveals.

This has risen by £4.5bn, from £26.6bn in 2022.

Almost 3.3 million pension pots are now considered lost, containing an average sum of £9,470.

This rises to £13,620 among people aged 55 to 75.

PPI said a combination of people switching jobs and automatic enrolment into workplace pensions is behind the increasing number of lost pensions.

Earlier this week pensions minister Emma Reynolds repeated the government’s commitment to developing Pension Dashboards, which aims to make it easier for savers to locate old pots and combine pensions.

The Department for Work and Pensions (DWP) is currently working on plans to automatically consolidate small pension pots of less than £1,000.

Rachel Vahey, head of public policy at AJ Bell, said: “Automatic enrolment is often held to be one of the most successful public policies of our time.

“It is credited with enrolling over 11 million people into a workplace pension since 2012, creating many new pension savers.

“But with people switching jobs regularly – around 11 times over the course of a lifetime according to some estimates – it’s easy to see how some people end up losing track of the pension pots they have built up.

She said that lost pension wealth hitting £31.1bn, means “millions of people could be in danger of facing an incomplete picture when it comes to their long-term financial planning.”

“Knowing how much they have saved in a pension, and where that money is invested, is one of the most important steps savers can take to maintain a level of control over their future retirement,” she added.

“Only by having this overall picture can pension savers work out how close they are to achieving their financial goals, and what action they may need to take to get their desired income and standard of living in later life.

“The government is on the road to helping people achieve this. Pension Dashboards, once launched, will allow savers to see all their pensions in one place online, reuniting them with their lost pension wealth.

“But while we wait eagerly for dashboards to launch, there are important steps people can take today to track down their lost pensions and boost the overall value of their pension savings.”

A SAVVY saver has revealed how he stashed away almost £1,000 for Christmas with three clever savings tricks that anyone can do.

Sammie Ellard-King, 35, can now enjoy spending the cash on presents, food, decorations, plus all the trimmings without having to worry about breaking the bank or going in to debt.

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Along with his partner, Charlotte Johnston, 35, Sammie has been building a festive fund which involves him capitalising on a clever feature that comes with online bank, Monzo.

This is a facility which automatically “swipes” a set sum of money into designated virtual jars.

Sammie, who is self-employed and runs financial website Up the Gains to help others learn about money, told The Sun: “I first set up ‘savings pots’ with Monzo around four years ago and now have around nine in total.

“Some are joint with my partner, such as the one where we are slotting money away for the festive period.”

The couple, who live in Fleet, Hampshire have saved a regular amount here every month since January.

Sammie said: “Generally speaking, I set this at around £50 a month, but sometimes squirrel away more.

“It only takes a matter of seconds to set up a pot, and you can then earn a decent rate of interest on your hard-earned cash.

“It’s great having a dedicated pot building in time for Christmas.”

While rates can fluctuate, Sammie is currently earning 4.22% on this pot.

That means on savings of £1,000 he makes around £3.50 a month, or £42 a year.

He said: “I like this ‘ring-fenced’ approach because it means I never accidentally dip into my savings.”

ROUND IT UP

The money aficionado also takes advantage of another of the digital bank’s features known as “round-ups” to help boost his festive fund.

Sammie said: “Say, for example, you buy a £2.75 coffee using Monzo, the bank rounds up your spend to the nearest pound and adds 25p to the pot where you’ve turned on ‘round-ups.’

“I’m a big fan of automated saving – for me, it’s a complete no-brainer.”

It’s free to set up current account with the digital bank, which doesn’t have any high street branches.

Monzo bank offers pots as part of its current account, and customers can round up money automatically as well as scheduling regular deposits.

These types of features have now become common among many online and high street banks.

Plum, Chip, Chase and Starling are among the apps and digital banks offering auto-save features

Sammie said he has used several of these in the past to take advantage of the best rates on offer at the time.

Before moving your money to a new savings account, it’s vital to choose the right account for your needs – and to check the rates on offer.

You can do this with a site such as moneyfactscompare.co.uk.

Using Monzo isn’t the only hack Sammie uses to build his Christmas savings either.

SUPER-CHARGE SAVINGS

Sammie also has another clever trick to “super-charge” the amount he has to slot away.

“I run all of my spending through cashback sites,” he said.

Once you’ve found a deal on an item you want to buy, you just click through the link, and the kickback is paid into your account.

He said: “This hack really comes into its own in the run-up to the festive season when I’m spending more.”

The first part of Sammie’s trick involves him buying virtual gift cards.

“I usually do this through Everup or Cheddar,” he said.

“With sites such as these, I can earn cashback on purchases I make with gift cards.”

With Cheddar, users can get cashback while shopping at partnered shops automatically by linking their bank account to the app.

Users can also earn “instant cashback” by purchasing gift card credit to spend at certain stores, usually between 2% and 4% including at supermarkets like Tesco, Asda and Sainsbury’s.

With Cheddar, you can sign up for free (no credit checks or fees), and can claim a £5 bonus.

Similarly, with EverUp, you can earn cashback on gift card purchases. Both are free to sign up to and there’s noe fee.

Sammie then “turbo-charges” his earnings even more with another nifty move.

“Having bought gift cards, I ‘stack’ the money I earn from them by using the cards to make purchases via more well-known cashback sites such as Topcashback and Quidco,” he said.

“There’s a kind of ‘loophole’ which means you can do this, and essentially get a ‘double hit’ on the amount of cashback you get.”

With the likes of Topcashback and Quidco you can earn money on anything from everyday shopping to clothes, gadgets, phone deals and car insurance, just by making purchases with retailers via their websites.

Sammie said: “On occasions, thanks to a combination of cashback on gift cards from Everup and Cheddar – and then cashback from Topcashback or Quidco – I can get as much as 16% cashback in total.”

Remember when using cashback sites, you’re only saving money if you intended to buy the item in the first place.

Meanwhile many gift cards have expiry dates and if a shop goes under they could become worthless, so if you use the trick make sure you spend them as soon as you can.

MAXIMISE YOUR POT

One of Sammie’s top tips to make your money work even harder is to move earnings into an account paying interest.

“Lots of people make the mistake of leaving their cashback with the website where they earned it,” he said.

“But once I’m able to ‘cash out,’ I transfer my earnings into my Monzo pots, where the money can potentially earn more than 4%, paid monthly.”

While you might think all of this is time-consuming, Sammie insists this isn’t the case.

“It really isn’t that complicated or long-winded,” he said.

“The key is to download the relevant gift cards onto your phone before you go shopping.”

That way, he adds, even if you buy a £100 gift card, but only spend £65, you’ll still have £35 ‘rolled over’ for the next time you shop.

“The gift card ‘lives’ in the app,” he said. “It’s just a case of getting into good habits.”

“Another simple ‘win’ is to buy presents on ‘special events’ like Black Friday when there are some great deals to be had.”

The annual shopping event takes place on November 29 this year.

With just under 10 weeks to go until Christmas Day, Sammie and Charlotte, who works as a producer, have close to £1,000 in their Monzo Christmas savings pot.

This is down to a combination of regular monthly saving, round ups and topping this up with cashback.

Sammie said. “Having this money squirrelled away means we can really enjoy the festive period.

“We can buy lots of presents, treat ourselves to nice food, and go out with friends, without having to worry about money.”

Another of Sammie’s top tips is to start saving early.

“Once this year’s festivities are out of the way, it’s worth setting up a Monzo account with a dedicated pot ready for next year,” he said.

“Then you can make regular savings each month – and also look into setting up ‘round-ups’ – helping to make Christmas 2025 a lot easier on the wallet.

“It’s all about thinking ahead.”

In addition to Christmas, the couple have pots for an emergency fund, a sinking fund, a holiday fund – and a fund to furnish their new home.

In total they save around £300 a month in to nine different pots, adjusting the allocations depending on the priority at the time.

“Once the festive period is over, Charlotte and I will channel more into the ‘new home’ fund, said Sammie as they prepare to move from their their two-bed house in Hampshire to their “forever home” in Ramsgate, Kent.

“We are saving hard so we’ll be able to afford things like fridges and sofas when we move in – hopefully in early 2025,” said the financial whizz.

“This will mean we won’t have to buy stuff on credit, reducing the risk of us getting into debt.”

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories

Festive season should typically mean good times for consumer goods makers. Instead, companies like Nestle and Hindustan Unilever are grappling with slowing urban sales, as consumers impacted by food inflation spend less on packaged goods. To add to it, inflation in key raw materials like palm oil and tea is also biting, forcing companies to hike prices in a few segments, which while protecting margins raises the spectre of impact on volumes.

Just a day after Nestle India pointed to muted demand, especially in the foods and beverages space, rival Hindustan Unilever (HUL) too has pointed to moderating growth in urban markets.

On Wednesday, HUL reported a 4 per cent year-on-year decline in standalone net profit for the July-September quarter at Rs 2,612 crore, from Rs 2,717 crore. The maker of Dove soap and Bru coffee said revenue for the quarter rose 2 per cent from a year ago to Rs 15,319 crore from Rs 15,027 crore. Volumes (number of packs sold) in the quarter rose 3 per cent. In the June quarter, volumes had grown 4 per cent. 

Company officials pointed that in the base quarter, there was a one-off indirect tax credit from a favourable resolution of past litigation, which benefited both topline and bottomline in the beauty and wellbeing segment.

Over the past several quarters, urban growth had led the growth, while rural growth had been impacted due to poor monsoon rains last year and volatile food prices. The tide now seems to be turning, with rural markets continuing to recover gradually, but major metro markets now emerging pain points.

“FMCG market has witnessed moderating growth in urban market, while rural continued to recover gradually. Even at MET levels, volume growth has slowed down over last few months,” said Ritesh Tiwari, the chief financial officer of HUL.

The company has seen a slowdown in two major segments – personal care and foods and refreshments. Personal care segment declined 5 per cent with negative pricing and low-single digit volume decline. Foods and refreshments declined 2 per cent with also a low-single digit volume decline. 

“There are so many macro factors in this complex big ecosystem of the country that are in play. Its quite logical to assume that real wages, inflation, the agri-economy and employment levels all have an impact on the economy. But, we are not equipped to comment on. What we really know well is what is happening to our business. What we do read is a trending down of urban, a sustained but a gradual increase in rural and therefore an overall tepid growth this quarter. We expect it to probably stay there for the near-term,” said Rohit Jawa, the CEO amd MD of HUL.

HUL is taking calibrated price hikes in the current October-December quarter in tea and skin cleansing segments, to offset rising prices of tea and palm oil respectively. How this impacts demand going ahead is something that will have to be watched out for.

Last week, Maggie noodles maker Nestle India had also reported disappointing earnings for the September quarter, with consolidated net profit declining marginally. 

“While there are some greenshoots like moderation in CPI inflation, a good monsoon and populist announcements by some of the state governments, the overall expenditure increase by states remains modest. The consumer is still facing high food inflation. Raw material costs have started inching up and telecom tariff hikes could also hurt FMCG,” Kunal Vora of BNP Paribas Securities had warned in a recent report.